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The US dollar declined on Thursday, October 19, after rumors of a new head of the Federal Reserve System started circulating in the market.
As reported in a number of media reports, President Donald Trump is more inclined to appoint a new chairman of the Fed, Jerome Powell, who now acts as the manager of the Central Bank. I remind you that Powell is an advocate of a soft monetary policy, which can significantly slow down the process of raising interest rates in the US next year.
From this reaction of the market towards risky assets, even in spite of the aggravation of the political situation in Spain. However, if the conflict takes new turns, and it can start already this weekend, the pressure on the euro will grow substantially.
Yesterday's data on the US economy, released in the afternoon, did not support the US dollar.
According to the report of the Federal Reserve Bank of Philadelphia, in October, the production index rose to 27.9 points against 23.8 points in September. Economists had expected that in September the index would be 21.9. The index of leading indicators Conference Board in September 2016 decreased. The decline was 0.2% after growth in August and July. Economists had expected the index to grow by 0.2% in September.
The good support for the US dollar during today's Asian session was provided by the US Senate's approval of the budget proposed by the Republican Party for the next financial year. Such a scenario solves important problems on the way to tax reform. Today, it became known that the draft budget was approved by 51 votes against 49, which allows changes in the tax code only by the votes of the Republicans.
The leader of the Republican majority in the Senate, Mitch McConnell, said that the adoption of a new budget for the next fiscal year was critical for tax reform, which in the future would help strengthen the American economy.
As for the technical picture of the EUR/USD pair, the breakthrough in intermediate support of 1.1800 will lead to a further sale of risky assets with a return to the area of larger areas 1.1770 and 1.1730 by the end of the week.
Talking about the continuation of the growth of the European currency can only be after a sure breakdown and consolidation above the weekly maximum of 1.1850. This will allow to expect to update the levels, such as 1.1910 and 1.1950, in the short term.
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